Analysts: Apple and iPhone partners blowing it in India

Indian iPhone carriers Vodaphone and Bharti Airtel have only managed to move …

Apple recently launched its iPhone 3G in India, one of the fastest-growing mobile markets in the world. However, analysts say that missteps from Apple and its carrier partners are causing a colossal waste of an important opportunity. Though approximately 50,000 iPhones have been imported into India, analysts estimate that only 11,000 have been sold so far. "The company failed to strike a connect [sic] with Indian consumers," Prathap Suthan, national creative director of advertising agency Cheil Communications India, told LiveMint. "That, according to me, is their biggest failure and it may have repercussions for them in future as well. Whether they sold enough numbers or not is secondary."

There are several reasons being offered for the failure. One is the price—or, more accurately, the expectations of price. Steve Jobs announced that the iPhone would sell for around $199 world-wide. Apple was able to do so by having carriers subsidize a large portion of the price in exchange for a fixed term contract from the user, as is customary in the US and many other markets. But in India, handsets are not typically subsidized in this fashion; they are paid for up front. So while potential buyers expected to spend about Rs10,000 for an 8GB iPhone 3G, it instead sells for about Rs30,000. That's comparable with other similarly-featured smartphones, but still three times what customers were expecting.

Also, Apple left the sales and marketing up to its partners Bharti Airtel and Vodafone, neither of which were prepared to do so appropriately, according to one rival mobile firm. "To begin with, the company licensed the iPhone to two service providers who didn’t have any experience in the retail selling of handsets, which is a complex business in India involving different strategies for different income groups," said an anonymous executive. Essentially, half of all mobile phones in India are sold at various retailers. India's iPhone carriers only sell iPhones at their own stores, limiting widespread availability.

Both companies also did not market the iPhone with the same fervor Apple did in the US. While Apple lead the July launch of the iPhone 3G with a month-long ad blitz, Airtel and Vodafone did little in the way of advertising. Airtel ran a few commercial for a few weeks at launch, while Vodafone announced iPhone availability via customers monthly bills. "People who buy high-end products buy them either for their technological advantage or to enhance their status. So, marketers promoting a high-end product must bring out the technology and exclusivity factors in a vibrant manner,” said Devashish Das Gupta, the chairman of the marketing department at the Indian Institute of Management.

Apple, for its part, merely states that it was just wanting to establish a presence in India. Despite the reportedly poor showing in India and no official presence in China, the company easily surpassed its stated goal of moving 10 million iPhones in 2008. Whether Apple can cut into rival Nokia's sales—currently at around 70 percent of the Indian smartphone market—as it has in the US remains to be seen. Hopefully Apple can work with its carriers and adapt to India's unique, and burgeoning, market.